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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Occurs when LRAC is constant over a variety of plant sizes






2. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






3. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






4. Ei > 1






5. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






6. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






7. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






8. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






9. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






10. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






11. The additional cost incurred from the consumption of the next unit of a good or a service






12. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






13. The practice of selling essentially the same good to different groups of consumers at different prices






14. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






15. Product demand - productivity - prices of other resources - and complementary resources






16. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






17. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






18. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






19. The difference between total revenue and total explicit costs






20. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






21. Exists at the point where the quantity supplied equals the quantity demanded






22. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






23. Exists if a producer can produce more of a good than all other producers






24. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






25. Total product divided by labor employed. APL = TPL/L






26. The change in quantity demanded resulting from a change in the price of one good relative to other goods






27. 0 < Ei < 1






28. The difference between total revenue and total explicit and implicit costs






29. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






30. Ed = 1






31. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






32. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






33. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






34. The additional benefit received from the consumption of the next unit of a good or service






35. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






36. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






37. Models where firms agree to mutually improve their situation






38. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






39. The price of a good measured in units of currency






40. Entry (or exit) of firms does not shift the cost curves of firms in the industry






41. When firms focus their resources on production of goods for which they have comparative advantage






42. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






43. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






44. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






45. Ed > 1 - meaning consumers are price sensitive






46. Exists if a producer can produce a good at lower opportunity cost than all other producers






47. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






48. The rational decision maker chooses an action if MB = MC






49. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






50. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income